Moving Your Stop Loss To Breakeven Makes No Sense! 😕
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- Опубликовано: 15 май 2024
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Moving your stop loss to breakeven. Is it a good idea to move your stop loss to breakeven? Or is it silly? Is there ever a situation where it makes sense to move your stop loss to breakeven? This is a controversial subject. Everyone has a different perspective but I think this is quite personal. Some are against doing this and for valid reason. You can argue from a logical perspective that moving your stop loss to breakeven can have a negative return on expectancy or decrease your overall returns. Moving your stop loss to breakeven does have an advantage from a psychological perspective because some traders want to have that feeling of a 'free' trade. OK.
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Subscribed and liked no worries, I'm trading mostly crypto on a day basis volatile so find set to even works but does limit my strategy. Trading equities in isa and the limitation is platform so quite often set a sl below and dont get time to change it !
Not losing capital is as important as making profit me thinks 👍
Totally agree
amen.. end of day theyre the same thing in terms of bottom line contribution
Not taking risk is not wrong but in my mind you cant call that trading.
I'm a big fan of defensive trading. Protect your capital.
More important ✊🏽
Always move to break even if the trade isn't working well and I have to go out, go to sleep or just am "done" with the stress for the day. It stops me starring at the charts on my phone when i should be having a life and relaxing knowing the working day is effectively over.
Would be lost without the knowledge I have learnt here and on the price action course. Thank you Mark for all you do.
I can understand your point. Many times when you buy or sell at significant support/resistance levels the trade will immediately go in your favor, then you move your stop to break even, only to see price reverse and re-test your entry level, hit your stop and then reverse and go in the direction you had originally anticipated, leaving you with nothing to show and lots of frustration.
I’m also a structure trader and now exactly what you are talking about . I have a good win rate when I hit 1:1 I first then move my stop to break even ,
Maybe take the half of the table and let the rest run . Try I out ! :)
You're the best, most articulate, straightforward and easy to understand trading educator here in youtube. I've learned so much from you. Thank you and Kudos :)
100% agree. Mark is great.
Food for thought. I feel there's a case for both sides of this. I trade the DOW on 1 min and feel sl to b/e is essential because price can whip round and slam 100+ pts either way in the blink of an eye. SL step is conditional on size of the movement. If I take a position on a 4 hour chart on an fx pair and hold it over time,then its a different scenario
And I move mine up one penny higher then even for the euphoria of locking a quote winning trade!
Great content. Thank you. I'm one of those guys who moves stops to BE. But after taking profit at 1R on half the trade. Learnt that from VP at NNFX. Like you mentioned, gives me peace of mind to run the trades longer
I almost always move my stops up as the price increases. It is a day-trade after all. When I used to just buy and hope, I always lost money. Plan your trade and trade your plan. I’ll take a smaller lose, no loss, or small gain over a big loss any day. Then occasionally I snag an all day runner which makes it all worth while.
Your lessens are great. Thx keep on
Wow, thank you for the advice. Your insight is off the chart!!
Also moving the stop loss to break even could be the difference between a losing trader and a consistent trader
Thank you for the information
Great point! Love this content
Moving my stop loss to break even makes sense for me. Reasoning behind that is that I take trades at strong support/resistance areas. Once my trade hits it’s first PT, that should be enough to either change trend or at least show strength in my direction enough to not retest the recent support.
At least that’s what my back testing shows.
Absolutely love your videos, you are such a great tutor, keep it up !
I have to say - I have cut or worked on a lot of my bad habits in trading, especially since finding this channel. However this issue of moving my stop to break even or sneaking into the profits and then getting wicked out, then having the trade go up and causing me insane frustration - is the one I am still struggling with the most. I'm not taking big losses as much now, but i am getting most of my trades and profits cut too early due to the desire to lock some profits in. Seems like this is the next thing to be worked on. Thanks guys for covering it.
Great subject Mark! I trade short squeezes on high volume, trending stocks on a 1min chart. I bring my stop to breakeven once I hit 1R as it is a breakout strategy. If it comes back to buy price after 1R I see it as a failed breakout yet I have lost nothing. I feel that raising my stop for this trading style is free insurance and it sure beats taking a loss.
Great video. Being aware of our own psychology is one of the most powerful things we stand to gain 👍
Its easy one for me as i trade on momentum after 1:1 i go breakeven
Same
Thanks Mark again for a wonderful lecture. I've been following LiveTraders for a while now, and I figured that the '1R break-even' rule fits my trading personality really well - as you said, it comes down mostly to mindset and discipline. This goes with shooting for 2R targets on lower time-frames mostly, and after hitting 1R, stop moves to break-even.
Dividing your position helps with this. I set a pretty conservative, nearby profit taking target and sell 1/2 to 1/4 of my position at that spot. Once I've locked in at least a little profit, I'll move the stop on the remaining portion to break even. If I get stopped out, it's a bunt or base hit at best, but I can't lose at that point. If the trade goes well, then I make my money on the remaining portion of the position. I'd rather have a day of 2-3 bunts and base hits instead of swinging for the fences each time and hitting myself in the back of the head all day.
"Scaling out" you hit the nail on the head.. Once I take some money of the table I always go to BE and let it run until it approaches obvious point of support/resistance at which point I'm out
appreciate the video
This makes you break the rule. And destroy discipline
Very good video Mark! We have a slogan in our E-Mini scalping trading group, "A break even trade is a winning trade". As an example, for me personally if I'm shooting for 8 ticks and it hits 8 but does not fill and starts to come back I will put my stop to BE. If this occurs, I frequently might bail out before it pulls all the way back to the BE stop getting at least some profit. This strategy avoids 4 or 8 tick traps since many scalpers shoot for 4 or 8 ticks (or more with current volatility).
Great points about the psychology. Scaling out is similar. Doing this reduces risk but also reduces the size of the trade and probably reduces the total profit. Traders often combine the two. Let’s say the first profit target is £400. If the trade moves to a profit of £400, traders then think it’s a good idea to take a £200 profit, move the stop to break even and then trail the stop. I never understand this as the trade now needs to move the same distance again. Just to get another £200 because the stake has been reduced. Better to take the full £400 in the first place or move the stop up to a strategic position rather than break even. So I agree that break even is more about psychology but then that’s the main problem with trading in that people are defeated by lack of discipline.
Great topic for debate, and I am sure you are right when you suggest at the beginning that the use of 'breakeven' stops will vary between situations and personal trading styles. Trading daily charts results in a lot of scenarios where the trade goes into profit on D1, then retraces into loss for a while on D2, then into profit again which, with a breakeven strategy would result in repeated low profit trades. In other words, you have the confidence to give it room to move, plus know exactly when to put in the breakeven stop loss (I actually prefer to have them just short of breakeven so at least I get some money!).
Great subject. I like to split the trade and take targets and on the 3rd split I take 50% at target and move the stop to slightly in profit and let it run. It depends on the timeframe and the strategy which was used as entry. If it's a pullback strategy then if the entry gets taken out then the trade is no longer valid anyway because structure would have changed.
Presently I am a break even stop trader...and on practice is is amazing ...case by case acquiring the skill ,it is type of business with zero cost.
Thanks Mark great video, I am someone who likes to leave stop loss where it is because it confirms that the trade was never there to take and it makes me only take trades that fit my strategy. You were talking about scaling out of a trade, would you be able to do a video for scaling in and out of trades? I have just started trading a live account after 5 months of trading a demo account and really enjoying it. Thanks for all your videos really help when things get hard just to settle down and try again!
It depends on at least two factors in my opinion. One, the context of the market, and two, like Mark said, your own personal preferences on how it suits your strategy survivably and sustainably.
Thanks for video, I understand moving the SL to BE hurts statistic of the models, but due to my risk management, I always try to be in no more than 3 trades, so when I get into a trade and if it moves my way, I cut the risk, so it allows me to risk on another trade, then if both go my way it allows me to enter a third trade but keeping the risk under control, I feel this to help psychologically and I trade only stocks in ST, without leveraging, this procedure so far has been working well for me, even though it is probably taking me out of possible winners, it limits my losses and I'm happy with this compromise.
My mate moves sl very early in the trade which results in BE quite often, but he doesn't have so many losses.
I love the importance that you put on individual psychology. It's blowing my individual psyche!!
Best way to go break even when you dont want to move your stop is to take half of the position off at 1R that way if u lose you'll be break even or if it goes further you'll take advantage with half the size still. It's what I do and it works very well
Same here. Have been taking 25% off and moving SL to BE at 1R... also occasionally have been converting SL to Trailing Stop at 1.5 R to 2R.
MOVING MY STOP LOSS CLOSER TO MY ENTRY HAS COST ME 10’s OF THOUSANDS IN PROFIT IN THE LAST COUPLE WEEKS; - NOT TO MENTION THOUSANDS IN CAPITAL LOST IN FEES AND BAD TRADES THAT TOOK PLACE AFTER THE FRUSTRATION OF THE STOP LOSS BEING HIT!
NO REWARD WITHOUT RISK! I PRAY WE HAVE CONVICTION IN OUR GOOD TRADES.
Came at a right time, when I was at a fence, yeah, to let trade play out its full potential, or trail to breakeven after a certain criteria. Breakevens give lesser losses, but forgo to chances of higher returns. Now with no Breakevens, be prep to get more hits in capital but my stats gives me more net value at the end of the month. It's a matter of how comfortable you can get with losses, even if u know u ll get a little higher if you don't move to breakeven.
once you break even you always can re-enter. being out better than watching losses accumulating
How about leaving the sl in place and taking partial profits which cover the risk and commision. If price goes against you and hits stop loss you essentially breakeven.
Moving to breakeven just seems like an emotional thing to do.
depends on backtesting ...
What I like to do is rather than cut a trade at profit target, I'll move my stop to profit target when it gets there in the hope it keeps flying. Nothing to lose but at least I get to target and sometimes alot more.
Ur awesome bro 👍
what do you think about moving a stop loss when you know its about to reverse right as you get stopped out. Sometimes I have moved my stopped loss down just so I don't get stopped out. It has worked sometimes but it can get stress full sometimes. Its like a RSI push up divergence when you know its still likely going to fall.
Everything depends!
Let’s say you have one position and you want to scale in.
Next position is put on and the stop of first position is moved to break-even.
Now the first position is running with no risk.
Same with scaling out, I do that because I don’t know how far the trade will run.
good video
It might be a problem with your strategies. I believe your strategies are profitable by letting the probabilities play out, which is why breakeven stop losses are ruining them in your tests. Breakeven can be used in a way that makes no sense, but why not use it in a way that does?
I will provide an example of why one might move their SL to breakeven: You have made an analysis. Your analysis tells you that price is beginning a new trend, so you enter a trade in the trend direction near the bottom of the retracement. A period of time passes. You check the chart and notice that price has moved in the expected direction. According to your analysis, if price retraces past a certain level, your analysis is invalidated. That level happens to be above the price you entered the market at. *Therefore, it makes sense to move your stop loss to breakeven.* In fact, it does not make sense to keep your stop loss at its original price.
sir, for example, if one is tradeing in 2 lots then book profit in one lot with small profit and then move the second one to breakeven and be free
what do you say about this?
appricate your comments
shashi
New entry is better than keeping losing trade.
I agree. Some things don’t work for everyone. Which is why I don’t like moving mine to BE. Mines work well just letting it play out.
It's all down to the "loss aversion" heuristic. We get more pain from taking a loss than pleasure from having a win. I think the best way is to have a stop loss system that doesn't get triggered by "noise" and stick to it.
i typically trade off of engulfing candles at strong levels which indicates momentum trading. If the trade has the momentum to hit my 1:1, then it shouldnt have the momentum to hit my next BE SL, then if does end up wicking me out then i will wait for another entry
keep in mind that the effectiveness of moving SL to BE is also a function of your trade location. if you are the chasing type moving it to BE will definitely be a negative long term
I have tried both methods. My biggest problem with moving stop loss to break after hitting, say 1:1 target. It retraces then stops you out. Do you re-enter immediately? Do you re-enter at exact same prices? 7/10 times price already moved back in the trending direction after stopping you out at break even and it moves fast.
Maybe it's just me but re-entering after a stop out is SO bloody hard. I find it is better to not move your original stop loss until price has trended in your direction "safely". Safely as in, unless price does a reversal, it wouldn't hit your SL. Or once price has moved away from your entry, trailing SL since you are in profit.
How do you guys re-enter after stop out? Or do you?
Always protect your investment
The first stop loss should be set at what you’re willing to lose. (Though don’t set too tight)
The next one should be set to break even and the third should be set to protect gains (house money).
Let your profits run and kill losses quickly.
It’s up to u.... ask yourself if you will be my hurt if something hit ur failure point (SL) or if u moved ur SL to Breakeven n price actually hits u out at BE n takes off to tp which would hurt more?.... I used to be a BE trader but I realized it hurts more when prices hits me out n take off where my tp was.... n I am way more profitable without moving sl
I use brake even when i got 1/1 RR if price go back i don't have a problem with take BEP when i make trade on bep i can use this capital risk on next trade.
Hi, I let my Winners go big , I have a proper risk management approximately 1:2.5 trades but when I get winner after that I get 3 losses please help on this case
I say my stop loss is safety the platform I use let’s me move it into profit so I love this I win either way this is part of my strategy keeping the losses to a minimum
Stop definitely should move but when and how much are the real questions. Static stops are wrong I think
You can test it and see if moving it or not is more profitable in the long run or not
I'm finally being consistently profitable after a 2 years journey trading stocks and currencies and I find to be very positive to my trading moving the stop to BE after the price makes a lower high (in a downtrend) and just patiently trail it manually down above the most recent high. Sometimes I'll get stopped out but it's ok, that is the cost of making business.
I'm too stupid to backtest and calculate the statistically optimal stop loss technique, better to move SL to breakeven once target hit? Better to sell 50% and move SL up to breakeven? better to sell 25% once target halfway reached? etc etc. A man could go crazy thinking about this stuff.
I have noticed this in my trading
Statistically you’re at a disadvantage correct. But when my trade is 2r or 3r i move stops to breakeven or even in the money. You could debate that it will lower your statistics but it is a great thing for one thing and that is confidence. This is just as important. Because i have confidence i can now move stops breakeven and maximize my trades which increases my rrr, increases my confidence and increases my metrics. But i’m more a intra trend trader and i agree with you if someone is more of a scalper or momentum trader. It can hurt you. Besides that. Lot’s of people have to tight of stops anyway. So it’s a double whammy that screws your metrics
Entries/Exits/Stop losses/Breakeven stops - everything should be tested on historical data and then live. Even if you 100% discretionary trader. I'm trade ES and CL and when my 1st target reached I move to BE for the rest of my position. So it's a scaling out. I statistically proved for myself that it works best for my system for the last 10 years (yeah I did a lot of research (manually bar by bar)).
I think if the trade has moved over a third or half I think it makes sense to move the stop loss without this I would be making more losses. For this to work I think you need wider stop losses though to begin with.
Moving a stop-loss to your entry price does NOT break even because of commission/fees. Stop-loss has to be one pip above/below your entry price depending your long/short position.
I’ve been forward testing- taking 25% off the trade and moving SL to BE once my trade reaches 1R and it’s been working ok so far. (Forex, trading view, paper trading, mixed bag of Fractal technique and the 50/200 MA bounce, with 26 wins and 13 losses. Total of +$1300 over 2 weeks. Possibly could have been better if I had not moved SL to BE? Maybe? Will do a comparison: same/similar trades, same technique in 2 separate paper trade accounts eg. Trading view “Paper trading”and Oanda and see how it plays out or I could just back test this. trade-by-trade; standard lots, with a consistent 3:1 RRR and a SL 1ATR below swing?
Don’t worry . If u move to BE it will be hit and then the trade will move in the wanted direction . If not , it will hit the SL
Take 50% profit target and than the rest move to breakeven seems to work good.
get up about 25 pips and if the long term outlook looks like the run is going to continue, then move the s/l to b/e and the trade becomes risk free. This is a strategy so I don't know why you are encouraging people not to do this.
🧡💛💚💙 Great video. It's really important to treat trading like a Sport. Whatever it takes to keep you in the game, is extremely vital to survival. 🧡💛💚💙
Stress free trading
Moving it more advantageous when scalping
When your stacking trades , definitely a good idea to take a few profits and let the runners run with break even S/L
haha love it. "it may not be statistically or logically correct, but for them, it works, for them, they go, right" hahahaha
If a stop loss is moved to break even and that gives a statistical disadvantage. Then surely moving a take profit to break even while in loss gives you a statistical advantage?
Yes, as it has lower probability of touching.
I never exit unless the market prove me wrong . i want my target reached or nothing . i am fine with loss
How about cutting your stop loss in half
I’m a new trader (4 months) so what do I know... but IF I do use a stoploss (I’m in papermoney for scalping futures) 5 out of 7 times I lose, if I don’t use one, 75-80% of the time it comes back to me, and I make profit, ALL THAT BEING SAID, if I move my SL up, (futures) I move it to .25-.5 points above my buy in, that way I make a lil, and at a min my fees are covered by the market, not outa my pocket!
My $.02 worth
Subscribed....
I tend to over 80 pips
I move my stop to breal even at 50% candle close to target.
SAME
I move my Stoplosess at breakeven points at some Time... I'm Crude oil Traders From India
Great
If its profit close it why risk it?? Better $100 profit than $0..
No because I move it to keep me in profit 😀
1st comment, I move My winning trade to breakeven SL. And hits and after that gives good return and when I don't move SL to breakeven then it hits SL so loss.
Do i use the break even strategy most of the time selling my trades? "HELL YEAH" it saves me from losing money. Look if i made a trade and wind up break even or nearly that ok I'll just walk away and trade another day.
That is simply not true.
I move my stop to minimize my loss, in case I am wrong.
IF I am wrong, I am usually very wrong. So if it moves against me, I want to give as little back to the market as possible. Would be crazy to give more back than needed.
And seriously it's about making money, it is not about statistics.
If ur putting ur stop to break even I’d assume ur in fear which isn’t the best emotion to trade with
If the stop gets moved to BE guided by predefined parameters in your trading plan, it was a useful kind of fear that helped developed that strategy. But I get your point.
Have u ever made 200k usd as a trader?
Can this guy EVER make a decision?? Every video is ""maybe this, could be that, but don't forget the other"". Is it only his videos, or his whole lifestyle??
It's a spokesman for a a platform . They will wring every penny from you they can ie increasing the spread without any warning . Stop to break even is a free trade . You cant lose. If you scratch trade (break even ) and it pops then obviously you entered the trade at the wrong time . You could re enter or better still find another trade . Pure BS from someone who wants to take your money . Especially if you are new to trading .
Mark is not employed by any broker, they are simply sponsoring the channel. You've taken risk to get to that 'free trade' as you described it and you need to be compensated for that risk.
at the worst you miss out on something you couldnt have predicted anyway
at best you dont lose all your money. seems reasonable for people who want to be careful (newbie) (me) lol
Can someone tell me why when I do 1:1 on TradingView and execute my trade , the radiation is different . Example : profit target is 500 and my stop is 500. Then I use calculator to find my lots , but then when I execute my trade on m4 the profit target and stop are not in place. My stops now says 500 and tp 467
It's not right or wrong. It depends on your backtesting. Does it add or remove drawdown? Does it add profits or losses consistently over time? You're welcome @minorityuk
One question if anyone could clear my doubt.
When someone says that 90% of the traders don't make money , are those traders the ones who use stop losses?
I trade in Equities without stop losses with my own money. After placing order If the price goes down i am still ok and i dont cut loses and when the market heads up after few days i make profit. So i dont eventually loose. So will I be counted in above 90% who fail or 10% who win or in neither of the two categories.
- Some traders lose money because of tight stops, some lose money because of no stops (black swan events).
- If you are consistently profitable, over time, then you are part of the 10% (or 5%, or whatever the number is).
- I don't think it matters how you get there (we all have our unique approaches). The trick is to figure out what works for you and repeat it until you know you're part of the 10%.
- Holding through the valleys waiting for it to peak again seems like a risky approach to me, but for you it works. I've been caught in black swans, it ain't pretty.
Good luck.
My humble advice is, never trade without a stop. At least an emergency one, distance based on your strategy / approach.
What’s a stop loss? I make MONEY